After decades of disciplined saving, sacrificing, and planning, retirement is finally within reach. But for many people, that finish line comes with an unexpected feeling: anxiety. The paycheck stops. The accumulation phase ends. The nest egg you’ve spent a lifetime building is now ready to support the life you’ve envisioned, but a few common blind spots can quietly work against it. Let’s walk through four of the most frequent missteps we see from people approaching retirement.
#1. Underestimating Healthcare Costs
Healthcare is one of the most stressful financial topics in America right now, and it doesn’t get any simpler when you’re considering retirement. Yet too many people arrive at this milestone without a real plan, assuming it will “work itself out.” Healthcare costs are one of the single largest expenses retirees face, and a lack of planning here can impact a well-funded portfolio.
Before you retire, you need honest answers to some critical questions: Will a spouse still carry employer-sponsored coverage, and for how long? If you’re retiring before age 65, how will you bridge the gap before Medicare kicks in? Have you priced out what individual market coverage costs? Once you do reach Medicare age, are you accounting for supplemental coverage to fill the gaps Medicare leaves behind?
And if you’ve done a great job saving (particularly in pre-tax accounts like a 401(k) or IRA) don’t overlook something that’s called Income-Related Monthly Adjustment Amount, or IRMAA. This Medicare surcharge hits higher-income retirees with significantly elevated Part B and Part D premiums, and it catches a surprising number of retirees completely off guard. The bottom line: a thoughtful healthcare strategy isn’t optional. For many retirees, this is one of the most important decisions to walk through.
#2. Claiming Social Security Too Early
Social Security seems simple enough. You’ve earned it, you can start collecting it at 62, so why wait? For many pre-retirees, that logic is hard to argue with. Claiming early is a significant decision that deserves careful consideration.
Here’s where it gets tricky for those who plan to ease into retirement with part-time work. If you claim Social Security before reaching your Full Retirement Age (FRA) and you’re still earning income, the Social Security Administration will temporarily withhold $1 in benefits for every $2 you earn above a certain threshold (in 2026, that’s $24,480).
The math on waiting is compelling. Claiming at 62 can reduce your monthly benefit by as much as 30% compared to waiting until your FRA. Delaying beyond FRA earns you an additional 8% per year in credits all the way up to age 70. For a married couple, the stakes are even higher, as the higher earner’s benefit becomes the survivor benefit, making the claiming decision a lifelong income strategy, not just a personal one.
The good news? You don’t have to guess. At Flagstone, we use planning software where we can illustrate Social Security optimization and identify the claiming age that maximizes your lifetime income. It can be a valuable conversation to have with an advisor in the years leading up to retirement.
#3. Neglecting Tax Diversification and Roth Conversions
Here’s something that surprises a lot of people approaching retirement: the years right before and just after you stop working can be some of the lowest income years of your adult life. Your paycheck has stopped, Required Minimum Distributions haven’t kicked in yet, and Social Security may still be on pause, creating gap years that are one of the most valuable and underutilized planning opportunities in retirement.
If you’ve spent your career saving into a traditional 401(k) or IRA, those pre-tax balances will eventually trigger forced withdrawals that can push you into higher tax brackets, increase the taxation of your Social Security benefits, and even trigger IRMAA surcharges. Roth conversions during these lower-income gap years allow you to pay taxes now at a favorable rate so that money grows and is withdrawn tax-free later. The key is converting the right amount. This is one of the many reasons your financial advisor and CPA should be working together, combining portfolio knowledge and tax return precision to identify the ideal conversion amount year after year. If those two aren’t in the same conversation, you may be leaving one of retirement’s biggest opportunities on the table.
#4. Underestimating Longevity Risk
When people think of the single biggest variable in any retirement plan, many may think of the stock market, interest rates, or inflation. While those all play an important part, there’s another variable in the corner that many overlook – longevity. And most people tend to underestimate that number.
Thanks to advances in modern medicine, better nutrition, and people being more health-conscious in general, the odds of a long retirement have never been higher. A 65-year-old couple today has roughly a 50% chance that one spouse will live past 90. That’s potentially 25-30 years of retirement income that needs to be funded. Planning only to age 80 or 85 with a $1 million portfolio may leave less flexibility than many retirees expect.
The math gets harder if a long-term care event enters the picture. A serious illness, a cognitive decline diagnosis like Alzheimer’s, or the need for memory care can unexpectedly change the course of a retirement plan. Memory care facilities can run $7,000-$10,000 per month or more. Planning for longevity isn’t pessimistic. It’s the most optimistic thing you can do, because it means planning for a long, full life.
Can Flagstone Help?
Building wealth during your working years is something many people navigate on their own, and often quite successfully. But retirement is a different animal entirely. The decisions you face in the years before and after leaving work are among the most complex and interconnected of your financial life.
If you found yourself nodding along to any of these points, let’s talk. Our team at Flagstone specializes in helping people navigate this type of transition – and we’d be happy to start with a conversation.